Most businesses maintain property and casualty insurance, which is an insurance policy that covers physical damage to a business. Many businesses have taken their insurance coverage a step further and added business interruption coverage, a type of insurance that covers the loss of income that a business suffers after a disaster (such as the costs incurred due to the disaster-related closing of the business facility or due to the rebuilding process).
The additional coverage provided by the business interruption insurance includes the profits that would have been earned had the business remained open. If you maintain business interruption coverage, will it cover the loss of income and profits due to your business shutdown? Obviously the terms of the policy must be reviewed and will ultimately control. However, a typical trigger for coverage under such policies is whether there actually has been physical damage to the property.
Thus, does the COVID-19 outbreak, which causes the business shutdown, constitute physical damage?
Cajun Conti LLC v. Certain Underwriters at Lloyd’s of London, which was filed Monday, March 16, 2020 in Civil District Court for the Parish of Orleans, Louisiana, appears to be one of the first cases to argue such coverage. The case, brought by a restaurant in New Orleans, seeks a declaratory judgment against its insurer that the restaurant’s business income coverage should provide coverage due to, among other things, the COVID-19 contamination of the restaurant. The plaintiff has alleged, and will need to prove, that the coronavirus contamination of the restaurant’s premises would be a direct physical loss needing remediation to clean the restaurant’s surfaces.
In any event, insurance policies, and specifically business interruption insurance policies, should be reviewed to ascertain coverage.
The postings on this blog were created for general informational purposes only and do not constitute legal advice or a solicitation to provide legal services. Although we attempt to ensure that the postings are complete, accurate, and up to date, we assume no responsibility for their completeness, accuracy, or timeliness. The information in this blog is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. Readers should not act upon this information without seeking professional legal counsel.
This blog may contain links to independent third party websites and services, including social media. We provide these links for your convenience, and you access them at your own risk. We have no control over and do not monitor the content or policies (including privacy policies) of these third-party websites and have no responsibility for, and no liability with respect to, their content, accuracy, or reliability. Unless expressly stated, we do not endorse any of the linked websites or any product, service, or publication referenced herein or therein. We will remove a link to any site from this blog upon request of the linked entity.
We grant permission to readers to link to this blog so long as this blog is not misrepresented. This site is not sponsored or associated with any other site unless so identified.
If you wish for Wilentz, Goldman & Spitzer, P.A., to consider representing you, please obtain contact information from the Contact Us area of this blog or go to the firm’s website at www.wilentz.com. One of our lawyers will be happy to discuss the possibility of representation with you. However, the authors of Wilentz blogs are licensed only in New Jersey and/or New York and do not wish to represent anyone who viewed this site in a state where the site fails to comply with all laws and ethical rules of that state.